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Thai SEC Revises Net Capital Rules To Boost Liquidity




The SEC will allow securities companies to include the value of digital assets when calculating their net equity, although a haircut of at least 50% will be applied.

Thailands SEC (Securities and Exchange Commission) has revised its net capital requirements for brokerage and derivatives companies with the aim of ensuring sufficient liquidity to meet the increasing market turnover rate and growing interest. for digital asset trading.

Trading on the SET (Stock Exchange of Thailand) and TFEX (Futures exchanges in Thailand) have risen sharply in recent weeks, especially after the US election, which saw SET trading reach THB 166 billion in turnover. daily business and the TFEX jump to 1 million futures contracts According to the SEC, this is an increase of almost three times over regular trading volumes this year.

The SEC currently requires companies engaged in both securities and derivatives business to hold THB 25 million in equity, THB 15 million if they engage in securities or derivatives, and only THB 1 million. THB if they do not own the property of the customers and do not engage in trade. The SEC also specifies a minimum net capital ratio of 7%, based on the total outstanding debt.

Under the revised requirements, brokerage and derivatives companies will be allowed to use subordinated loans in place of net capital funds and adjust the risk weights of certain assets when transactions increase significantly in a short period of time.

In addition, the SEC will allow securities companies that operate digital asset businesses capable of transporting digital assets, including cryptocurrency, to include the value of those digital assets when calculating their net equity. . However, a discount of at least 50% will be applied depending on the quality of the digital assets.

In cases where securities firms also conduct digital asset business and store these assets for clients, companies should maintain equity funds that represent at least 1% of clients’ cold wallet funds and 5% of assets. hot wallet of customers.

When brokerage firms operate a digital asset business, but without storing clients’ digital assets, the equity must be at least THB500,000.

The SEC said the new net capital requirements would strengthen liquidity management for securities companies and derivatives dealers, and also support the establishment of digital asset exchanges.

Securities firms are currently consulting with the SEC to try to enter new lines of business, including launching digital asset exchanges.

The revised rules will come into effect on January 1, 2021.

Additional reports from Bangkok Post.

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